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This article was published on September 9, 2013

Instagram to begin monetizing service with ads ‘within the next year’ as it tops 150m monthly users

Instagram to begin monetizing service with ads ‘within the next year’ as it tops 150m monthly users

Instagram has just grown a little bit more — today, the photo-sharing company revealed that it now has 150 million monthly users, a 15 percent increase since its last count two months ago. The news also comes in light of a report from the Wall Street Journal that says the company will begin monetizing its service within the next year. Yes, ads are coming to the popular mobile app.

Right now, Facebook has no way to make money off of the service. It isn’t offering any premium features, stickers, or anything else to generate revenue.

The first hint of ads came during the social networking company’s Q2 2013 earnings conference call when CEO Mark Zuckerberg discussed how Instagram would be monetized. He said:

Kevin Systrom has always been clear that we’re building Instagram to be a business. We expect over time to generate a lot of profit from it. We think the right focus for now is to continue increasing the footprint of Instagram and, when the right time comes, we’ll think about advertising.

Instagram’s Emily White, who is described by the WSJ as its Chief Operating Officer, is the person responsible for making that transition happen when told by Systrom.

There’s certainly no shortage of content on Instagram either, but how does Facebook intend to sell compelling ads to its users? The only content on Instagram are photos and videos — this is different from Facebook where you can post media, status updates, play games, and have a slew of other meta data available to help the social network better target you. Perhaps Instagram would solicit to you based on your location, the types of photos you’ve posted or liked, or friends you’ve interacted with?

According to the Wall Street Journal’s report:

Ms. White’s team is looking at the possibilities around the app’s Discover feature, which promotes popular content, as well the search function, which allows users to look up images or themes. Ms. White said some retailers also are interested in ad products that will allow users to click on pictures of products that link to a retailer’s own site. But she expressed reservations about such a system because many mobile websites need improvement.

Ads on Instagram are not going to be an easy sell to its users — many will revolt against it and push back, especially in light of the company’s debacle with its terms of service last December. At the time, Systrom explained the reversal saying:

Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet deployed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work.

All of this happens in light of the service’s growth — where 60 percent of its 150 million users come from outside of the United States. To put that number into perspective, Facebook has 1.15 billion and Twitter has 200 million monthly active users.

Instagram Pictures Itself Making Money (Wall Street Journal)

Photo credit: THOMAS COEX/AFP/Getty Images

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